Closed stores will be a tough sell for Kmart

Kmart Corp., which has periodically shed store sites around Chicago over the past decade, is about to launch its latest blue light special, though this time, the real estate may be a tough sell.

The Troy, Mich.-based discount retailer announced July 25 that it will close nine local stores as part of a 72-store shutdown nationwide. All of the properties were acquired two years ago from Missouri-based Venture Stores Inc. when that discounter abandoned Chicago. The stores, which are leased by Kmart from Kimco Realty Corp. in New Hyde Park, N.Y., are expected to go on the market by the end of October.

It will be Kmart's responsibility to find new tenants for each store  likely a tall order, observers say, despite the fact that many of the stores are on prime thoroughfares. One problem: With estimated rents of $8 to $10 a square foot, the space is comparatively expensive. Other vacant spaces can be had around Chicago for as little as $4 a square foot.

Another problem is the size of the Kmart stores. At 80,000 to 100,000 square feet, they're too small for "big-box" retailers like Home Depot and Costco, but too large for traditional grocery stores.

"There is still a very active big-box market here, but the real demand is for larger boxes than what Kmart will be offering," says Todd Caruso, managing director of CB Richard Ellis Services Inc. in the firm's Lincolnshire office. "And I don't see any retailers outside Chicago standing by and looking to come into this market who might try to take all these locations."

The stores earmarked for closing range from such excellent locations as 22nd Street and Midwest Road in Oakbrook Terrace and Route 59 and New York Street in Naperville to such historically poor retail sites as 1500 S. Elmhurst Road in Mount Prospect and 450 Airport Road in Elgin, adjacent to Route 31 and the Northwest Tollway. A site in the Brickyard Mall on Chicago's Northwest Side was once one of the highest-grossing Venture stores in the region.